EXPERT ANALYSIS: Defining and Understanding Greenwashing

Did you know there is no universally accepted definition of “greenwashing” or “green claims”? How can companies comply with numerous sustainability regulations when there are no fundamental definitions?

In an era where sustainability is not just a buzzword but a regulatory necessity, consumers expect companies to validate their green claims. However, two contrasting practices - greenwashing and greenhushing - are making it difficult for consumers to distinguish genuine efforts from deceptive ones. Before we explore the challenges of greenwashing, it’s important to recognize that the lack of clear definitions is a fundamental issue.

In a recent academic paper titled “An Integrated Framework to Assess Greenwashing,” researchers address this lack of standardization. They define greenwashing as “the dissemination of false or deceptive information regarding an organization’s environmental strategies, goals, motivations, and actions.”

Additionally, the European Union’s Empowering Consumers for the Green Transition Directive defines green claims as any message or representation that is not mandatory under Union law or national law, that states or implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, respectively, or has improved their impact over time. This includes text, pictorial, graphic, or symbolic representation in any form - including labels, brand names, company names, or product names - in the context of a commercial communication.

Global Efforts Escalating to Stop False Claims

Greenwashing regulations worldwide have been evolving to address the concern of misleading environmental claims. In the EU, the Green Claims Directive and the Empowering Consumers for the Green Transition Directive aim to prevent companies from making false or misleading environmental claims. These directives require companies to provide clear and accurate information about the environmental impact of their products, including details on durability and repairability.

In the United States, the Federal Trade Commission (FTC) has been updating its Green Guides, which provide guidance on environmental marketing claims. The FTC aims to set standards for terms like “net zero” and “carbon-neutral” to prevent misleading claims. The Securities and Exchange Commission (SEC) has also been working on regulations for ESG-labeled investment products and, in 2021, created the Climate and ESG Task Force. Additionally, Washington state has adopted new plastic product degradability standards as part of the Organics Management Law. This law helps protect consumers and business owners from greenwashing marketing by requiring specific labeling for compostable products, including third-party certification logos, color signals, and the term “compostable.”

In the Asia-Pacific region, many countries have developed stringent guidelines for ESG disclosures and labeling to combat greenwashing. For example, the Monetary Authority of Singapore (MAS) proposed plans to align with the International Sustainability Standards Board (ISSB) to further the Singapore Green Plan 2030.  Additionally, Malaysia has created a Taskforce on Climate-Related Financial Disclosures (TCFD).

Greenwashing vs. Greenhushing

Common tactics of greenwashing often involve the use of vague claims and hidden trade-offs. Vague claims include terms such as “eco-friendly,” “natural,” or “green,” which are used without providing specific evidence to support them. Hidden trade-offs refer to promoting one environmentally better aspect of a product while ignoring other environmental issues associated with it, such as highlighting recyclable packaging while ignoring the pollution caused during the production process.

Greenwashing can temporarily boost sales and improve public perception. However, once exposed, it leads to severe reputational damage, loss of consumer trust, and potential legal consequences.

In contrast, greenhushing involves companies deliberately downplaying or withholding information about their substantiated sustainability efforts. Companies may fear backlash from not meeting all expectations or from being accused of greenwashing if their efforts are deemed insufficient.

There are many reasons why a company might choose this approach. There is a fear of scrutiny, as companies are concerned about the authenticity and comprehensiveness of their sustainability initiatives. Jason Jay, who leads the Sustainability Initiative at MIT Sloan, shared the following in an interview with the World Economic Forum: “If I tell you I'm buying a green cleaning product for my house, you might not expect it to get mildew off the shower tiles.” Companies may also worry about competitive disadvantage, fearing that revealing their sustainability strategies might give competitors an edge by allowing them to copy or improve upon these strategies.

Navigating the fine line between greenwashing and greenhushing requires companies to commit to transparency and accountability. To achieve this balance, companies must implement specific, measurable, and verifiable information about their sustainability efforts.

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Editor's Note: 3E is expanding news coverage to provide customers with insights into topics that enable a safer, more sustainable world by protecting people, safeguarding products, and helping businesses grow. Expert Analysis articles, produced by 3E subject matter experts, researchers, and consultants as well as external thought leaders, examine the regulations, trends, and forces impacting the use, manufacture, transport, and export/import of chemicals.